I have 14GB free on my C:\. My LR catalogue files are on a separate drive but when creating a pano merge the process eats up all available space on the C:\. Can this behaviour be changed to use another drive?

It might be helpful to change the location of your Lightroom cache file and put it on an external hard drive. 14 GB sounds like a lot of free disk space, but it really isn't. You should normally have 20-25% of a disk free.

Thanks Jim. Just came off a support chat with Adobe and its been 5 hours! The upshot is that the space usage isn't expected and its being escalated. As an example he took 4 of my images and ran a Pano merge, he saw usage of 130 MB. If I ran a pano on 10 images it was using 2GB. Some of my panos are more than 10 images but I was using 14GB when creating the merge! Something clearly not correct. Yes some of the space is given back once it completes but to see space recovered to what it should we were having to restart LR!! Shouldn't need to do that especially if doing more than one pano.